Langham Hospitality Investments And Langham Hospitality Investments Limited - 3Q 2017 - Langham Hospitality ...
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Langham Hospitality Investments
And
Langham Hospitality Investments Limited
3Q 2017
1A quality hotel portfolio located in Hong Kong’s CBDs
Developments underway to • International trade / finance hub and popular shopping / tourist
strengthen Hong Kong as a destination
leading tourism destination • More tourism and infrastructure projects are under development
Actively • Internationally recognised
Managed • Increasing global presence of Langham branded hotels
Brands • Active manager with an “owner-manager” mentality
• Prime locations on the Kowloon peninsula
Strategic
• Major infrastructure and commercial centres under development
Locations
• Restricted new supply in core business districts
• Our objective is to provide stable distributions with the potential for
sustainable long term growth of such distributions and enhancement
in the value of the hotel portfolio
• Accomplished through the lease structure, active asset management
and ROFR from Great Eagle
2Our Hotels are Strategically Located on the Kowloon Peninsula in
Hong Kong
Kowloon Peninsula, Hong Kong Prime Shopping Destinations
Nam Cheong
Prince Edward
To Hong Kong
Airport
Mong Kok East
Nathan Road
Mong Kok Shopping &
Olympic Tourist belt
The Langham
Yau Ma Tei
International Commerce
Centre & West Kowloon 2
Cultural District
(under planning)
Austin
Jordan
Kowloon Hung Hom
Cordis
3
Tsim Sha Tsui
Canton Road
Shopping Belt &
Tsim Sha Tsui To Hong Kong
office district Island
Metro lines MTR station West Kowloon Terminus
Guangzhou-Shenzhen-Hong Kong Express Rail Link (under construction)
Eaton
• Close proximity of key tourist and shopping belts, existing and expanding commercial districts and future infrastructure
• Easily accessible via major roads, MTR stations, the Hong Kong International Airport and rail to mainland China
34
5
6
High Quality Portfolio
High Quality Langham Branded Hotels Selected Awards
The Langham
Location : Tsim Sha Tsui, Kowloon
Forbes 5-Star Award
Year of commencement : 1994
HKTB rating : High Tariff A Hotel • Three-star Michelin award for T’ang Court
GFA (‘000 sq.ft.) : 375
Number of rooms : 498 • Best City Hotel – Hong Kong Award by
Facilities : 5 restaurants, 1 ballroom, TTG Travel Awards
4 meeting rooms, Jacuzzi,
health club, fitness centre
Cordis Hotel
Location : Mong Kok, Kowloon • “Top 25 Hotels in China” by TripAdvisor
Year of commencement : 2004 Travellers’ Choice
HKTB rating : High Tariff A Hotel
• Two-star Michelin award for Ming Court
GFA (‘000 sq.ft.) : 580
Number of rooms : 668 • Condé Nast Gold List
Facilities : 4 restaurants, 1 ballroom,
3 meeting rooms, Chuan • Spa Traveller Awards
Spa, fitness centre
Eaton Hotel
Location : Yau Ma Tei, Kowloon
Year of commencement : 1990 • One-star Michelin award for Yat Tung Heen
HKTB rating : High Tariff B Hotel
Best Eco Hotel in Hong Kong
GFA (‘000 sq.ft.) : 339
by HotelClub Hotel Awards (Hong Kong)
Number of rooms : 465
Facilities : 5 restaurants, 3 ballrooms, • Capital Entrepreneur Green Enterprise
2 meeting rooms, fitness
Awards by Capital Entrepreneur
centre
Three high quality Langham branded hotels with a combined 1,631 rooms strategically located on the
Kowloon peninsula, Hong Kong
7… and have a Balanced Mix of Room and Non-room Revenue
Wide Range of Non-room Revenue Sources Balanced Revenue Contribution(1)
2.5%
Range of award-winning facilities and services
• Food and beverage
• Banquet services
• Meeting and conference facilities 42.2%
55.3%
• Spa facilities
Relatively stable even during the global financial crisis
Strong demand from non-hotel customers
Well positioned to benefit from Hong Kong’s growing MICE market Room
Food and beverage
Other hotel operations
Award-winning Restaurants and Quality Conference spaces
Michelin star-rated restaurants Conference spaces
Ming Court (Two-star Michelin), T’ang Court (Three-star Michelin), Yat Tung Heen (One-star Michelin),
Cordis Hotel The Langham Eaton Hotel
The majority of the Hotels’ food and beverage revenue was derived from customers who were
not staying at the Hotels
Note:
1. For six months ended 30 June 2017 8Our Customers are Diversified in Terms of both Geography and
Customer Segment…
Diversified Geographical Origin of Customers(1),(2) Diversified Customer Segments(1)
5.1% 6.8%
7.8%
33.8%
27.9%
50.7%
24.6%
7.5%
9.8%
7.6% 8.2% 10.1%
China Australia and NZ US Europe ex UK UK Rest of Asia Others Retail Corporate Travel trade Group Other
Target Different Market Segments and Do Not Directly Compete with Each Other
Average Room Rates(1) Geographical Origin of Customers(1),(2) Customer Segment Breakdown(1)
(HK$) 2,086 (%) (%)
1.3 14.3 1.8
3.5 6.2 5.5 7.1 10.1
1,590
18.7 6.5
5.8 30.1 34.1 28.9 22.5
4.9 23.2
10.1 7.3 6.7
945 9.4 13.1
9.1 8.7 10.5
7.9 9.0
8.8 6.9
11.6 59.0
48.0 49.6 45.5
31.1 23.4
The Langham Cordis Hotel Eaton The Langham Cordis Hotel Eaton The Langham Cordis Hotel Eaton
China Australia and NZ US Retail Corporate Travel trade Group Others
Europe ex UK UK Rest of Asia
Note: Others
1. For six months ended 30 June 2017 9
2. Based on self-reported data collected at the time of guest registration and have not been subject to audit or review by an independent third party. Such
data excludes room revenue derived from airline crew and others from unidentified countries and other miscellaneous revenue and service chargesOur Hotels are Managed under the Internationally Recognised Langham
Brands by the Hotel Manager, Langham Hotels International Limited
Our Unique Position Description of the Hotel Manager
• Langham Hotels International Limited is a wholly-owned subsidiary
• Since 1865 of Great Eagle
• Unique style
• An operating track record of over 20 years
• European heritage
• One of the largest luxury hotel operators in Hong Kong
• Classic charm
• Local expertise and experience
• Luxury bespoke service
• Increasing exposure to other worldwide gateway cities
Selected Awards of Hotels Managed by the Hotel Manager
• Meaning “Heart” in Latin
• Lifestyle setting
• Committed to nurturing
cultural and community
in the neighbourhood
• Mid-scale to up-scale brand
• Embodies modern design
• Value for money philosophy
We believe strong brand recognition is one of the factors that has enabled the Hotels to command prices at
the high end of their competitive market segments
10The Langham Brands have a Presence across Four Continents
Hotels in Hong Kong and China Hotels in Europe / America
The Langham, Hong Kong The Langham, Haikou Eaton Washington D.C. The Langham, London
Location: Hong Kong Location: China Location: United Sates Location: United Kingdom
Total rooms: 498 Total rooms: 249 (under renovation) Total rooms: 380
Cordis Hotel Cordis Hongqiao, Shanghai Chelsea
Location: Hong Kong Location: China Location: Canada
Total rooms: 668 Total rooms: 396 Total rooms: 1,590
Eaton, Hong Kong The Langham, Boston
Location: Hong Kong Location: United States
Total rooms: 465 Total rooms: 317
The Langham, Xintiandi, Shanghai The Langham, Pasadena
Location: China Location: United Sates
Total rooms: 357 Total rooms: 379
Langham Place, Beijing Capital Airport The Langham, Chicago
Location: China Location: United Sates
Total rooms: 372 Total rooms: 316
Langham Place Haining
Langham Place Fifth Avenue, New York
Location: China
Location: United Sates
Total rooms: 263
Total rooms: 234
The Langham, Shenzhen
Location: China - Existing hotels - Pipeline hotels
Total rooms: 352 Hotels in Australia / NZ
Langham Place, Ningbo Culture Plaza The Langham, Auckland
Location: China Location: New Zealand
Total rooms: 143 Total rooms: 411
The Langham, Melbourne
Langham Place, Xiamen Future pipeline(1)
Location: Australia
Location: China Cordis Hangzhou Langham Place Bali Eaton , San Francisco Langham Place, San Francisco Total rooms: 388
Total rooms: 327
Langham Place, Datong Langham Place Dubai Langham Place Wade Park Langham Place, Tokyo
Cordis Shanghai East Bund Langham Place Lusail Doha Langham Place Dalian Cordis Ningbo
Langham Place, Guangzhou The Langham, Sydney
The Langham Bangkok The Langham Jakarta The Langham Jeddah Eaton Seattle Location: Australia
Location: China
Total rooms: 500 The Langham Chongqing The Langham Hefei Langham Place Changsha Total rooms: 100
• Currently manages a portfolio of 22 hotels comprising almost 9,000 rooms
• Pipeline of hotels to be opened in coming years(1)
Note:
1. Source: Great Eagle Holdings Company filings
112017 Interim Results
Highlights of 2017’s interim results
• RevPAR for the Trust Group’s hotel portfolio rose by 3.9%.
RevPAR rose 3.9% • F&B revenue impacted by renovation plan at Eaton, Hong Kong.
in 1H 2017
• Total Hotel revenue rose by 2.2% and GOP increased by 6.2%.
• Total rental income rose by 3.3% to HK$332.8 million.
Distributable income
• Profit excluding exceptional items* rose by 0.8%.
impacted by non-
operating items • Distributable income dropped by 8.1% to HK$209.6 million on
increased cash tax and interest payments in the first half of 2017.
• Before the impact of distribution waived, distribution per unit
Distribution per unit
dropped by 9.0% to HK10.1 cents in the first half of 2017.
further impacted by
less units waving • And dropped by 12% to HK10.3 cents after the impact of
distribution distribution waived on less units waiving distribution.
• Renovation for Eaton, Hong Kong from July 2017 will lower F&B
Outlook on
revenue for the hotel in the second half of 2017.
distributable
• Distributable income will continue to be impacted by higher cash
income
tax and finance payment in the second half of 2017.
* Items including fair value change of investment properties and
derivative financial instruments 13Hotels performance
• Recorded a 2.2% increase in RevPAR in the first half of 2017.
The Langham, Hong Kong
• Benefitted from increased travellers from Mainland China.
• RevPAR for the hotel staged a strong rally with a 6.0% growth in
Cordis, in the first half of 2017.
Hong Kong
• In part due to a low base effect, as performance in the first quarter
of 2016 was negatively impacted by protests near the hotel.
• Delivered a 3.0% increase in RevPAR in the first half of 2017.
Eaton Hotel, • Witnessed a 13.0% decline in F&B business, as it accepted fewer
Hong Kong banqueting reservations as renovations was originally planned in
the first quarter of 2017.
• Revenue from F&B dropped 0.5% in the first half of 2017.
• As the growth in F&B revenue witnessed at The Langham and
Cordis was fully offset by a decline in F&B revenue at the Eaton.
142017 Interim results
Hotels operating performance for 1H 2017
Average Daily Rooms Available Occupancy Average Room Rate RevPAR
1H 2017 1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017 1H 2016
The Langham, Hong Kong 498 498 85.6% 84.2% 2,086 2,078 1,787 1,749
Cordis, Hong Kong 661 650 91.6% 85.4% 1,590 1,610 1,456 1,374
Eaton, Hong Kong 465 465 96.9% 92.2% 945 963 915 888
Y-o-y growth in 1H 2017 Occupancy Average Room Rate RevPAR Food and Beverages
(in % pts)
The Langham, Hong Kong +1.4 +0.4% +2.2% 2.0%
Cordis, Hong Kong +6.2 - 1.2% +6.0% 4.2%
Eaton, Hong Kong +4.7 -1.9% +3.0% - 13.0%
Respective markets
High Tariff A Hotels +3.0 -5.7% -2.2%
High Tariff B Hotels +2.0 +0.5% 2.9%
All Hotels +3.0 -2.4% 1.0%
Note: 15
The Langham and Cordis are classified as Tariff A hotels, whereas the Eaton is classified as a Tariff B hotel.2017 Interim Results
1H 2017 1H 2016
(HK$ mn) (HK$ mn) Change
Fixed Rental Income 111.6 111.9 -0.3%
Variable Rental Income 220.3 207.4 +6.2%
Rental Income from retail shops 0.9 3.0 -70.0%
Gross Rental Income 332.8 322.3 +3.3%
Property operating expenses (12.9) (12.3) +4.9%
Services Fees (Including hotel management fee) (41.3) (39.6) +4.3%
Net Property Income 278.6 270.4 +3.0%
162017 Interim Results
1H 2017 1H 2016
(HK$ mn) (HK$ mn) Change
Net Property Income 278.6 270.4 +3.0%
Increase in fair value of investment properties 295.8 100.6 +194.0%
Decrease in fair value of derivative financial
(50.7) - n.a.
instruments
Trust and other expenses (5.5) (7.4) -25.7%
Net finance cost
Finance cost (73.2) (63.8) +14.7%
Interest income 1.5 0.9 +66.7%
Other income 0.4 - n.a.
Profit before tax 446.9 300.7 +48.6%
Income tax (37.2) (36.8) +1.1%
Profit attributable to holders of Share Stapled
409.7 263.9 +55.2%
Units
Profit excluding Fair Value change of Investment
Properties and derivative financial 164.6 163.3 +0.8%
instruments
172017 Interim Results
Adjustment to Distributable Income: 1H 2017 1H 2016
(HK$ mn) (HK$ mn) Change
Profit attributable to holders of share stapled units for the
409.7 263.9 +55.2%
period
Hotel management fee and licence fee
33.0 31.7 +4.1%
paid in share stapled units
Amortisation of debt upfront fee 9.0 15.6 -42.3%
Deferred tax 14.1 28.4 -50.4%
Cash contribution to FF&E reserve (11.1) (10.9) +1.8%
Change in fair value of investment properties (295.8) (100.6) +94.0%
Decrease in fair value of derivative financial ins. 50.7 - n.a.
Distributable income to Share Stapled Unitholders 209.6 228.1 -8.1%
Distribution per unit (HK$) - after distribution waiver 0.103 0.117 -12.0%
Distribution per unit (HK$) - before distribution waiver 0.101 0.111 -9.0%
181H 2017 Finance cost
1H 2017 1H 2016
(HK$ mn) (HK$ mn) Change
Interest expense on floating HK$6.8 billion
(49.9) (48.2) +3.5%
bank loan
Amortisation of loan upfront fee (9.0) (15.6) -42.3%
Interest paid on fixed interest rate swap (14.3) - n.a.
Total Finance cost (73.2) (63.8) +14.7%
Cash Finance cost (64.2) (48.2) +33.2%
Cash Interest rate 1.89% 1.42%
Loan with Floating vs. Fixed interest rate as at the end of June 2017
HK$3,300 million Floating rate base on HIBOR+ all-in interest spread of 1.23% p.a.
HK$3,500 million Fixed rate at 2.75% (using interest rate swaps at 1.52% p.a.)
Total HK$6,800 million
19Balance sheet
Healthy financial position
The hotel properties were revalued at HK$18,763 million. Net Asset Value attributable to share stapled unit holders was HK$5.70 per unit.
As at 30 June 2017, the Trust Group’s gearing was comfortable at 35.7%, compared with 36.1% as at the end of 2016.
With an adequate interest coverage ratio of around 4 times.
Refinanced a loan with better terms
A loan of HK$6,800 million was successfully refinanced in May 2016 with a lower all-in cost of 1.23% (previous loan was 1.7%).
Furthermore, the extended maturity to four years effectively eliminates refinancing risks for the Trust Group in next four years.
In addition, a revolving credit facility of up to HK$400 million has been obtained.
Timely treasury management
The Trust Group has effectively fixed the interest rate of HK$3,500 million of our bank loans.
Via entering into interest rate swap contracts from early November 2016 to April 2017 at an average interest rate of 1.52%.
Continue to monitor interest rates and possibility of entering into more interest rate swaps.
20Going forward, we have an i) Acquisition Growth Strategy,…..
The Great Eagle ROFR – Initial Focus in Asia LHI Strengths as an Acquirer
• Completed standalone hotel in Asia which GE proposes to sell(1)
Owner-operator
• Completed hotels in Asia which GE is offered opportunity to buy(1)
• Uncompleted hotels upon completion in Asia(2) Senior management’s track record in acquisition and development
• Completed hotels to be branded under the Langham brands or other
Attractive initial core Hong Kong portfolio
Eaton brands(1)
Acquisition criteria:
(a) Total return enhancing; (b) Initial focus on hotels in Asia; (c) Strong fundamentals, organic growth and asset enhancement potential
Great Eagle’s Remaining Global Portfolio(3)
The Langham, London The Langham, Boston The Langham, Melbourne The Langham, Sydney The Langham, Auckland Washington D.C. hotel
Pipeline hotels:
Langham Place,
Dalian(3)
Langham Place,
Tokyo(3)
Two Hotels in San
Francisco(3)
Eaton Seattle(3)
The Langham, Pasadena The Langham, Xintiandi Chelsea Hotel, Toronto Langham Place, New York The Langham, Chicago Cordis Hongqiao
Note:
1. Which the Great Eagle Group owns an over 30% interest and that is being managed/proposed to be managed under the Langham Brands or Other Eaton Brands
2. Any uncompleted, stand-alone hotel development project in Asia to be operated under the Langham Brands or Other Eaton Brands on completion and any completed hotel to be segregated from
the multi-purpose development of which it forms a part, and in which the Great Eagle Group owns an over 30% interest, provided that completion or segregation, as applicable, occurs prior to the
expiry of the Great Eagle ROFR
3. To be opened over 2018-2021.
21….as well as an ii) Active Asset Management Strategy to grow
distributions for our share stapled unitholders
The Langham, Hong Kong
All the rooms at The Langham, Hong Kong have been refurbished as at the end of 2015.
Renovations of T’ang Court and The Bostonian restaurant have been completed in 2016.
Renovation of the Spa, health club and swimming pool commenced in 2Q 2017.
Cordis, Hong Kong
Rebranded to Cordis in August 2015.
Renovation of all the standard rooms, spa and health club have been completed in 2016.
Renovation of the suites and subdividing a suite into multiple standard rooms commenced in 1Q 2017.
Eaton, Hong Kong
The Eaton brand is being revamped to target millennial travellers.
Renovations of the Hotel entrance, lobby, Chinese restaurant, ballroom and meeting place commenced from mid-2017.
Renovation will include a social hub, co-working space and food hall targeting millennial travellers.
22Thank You
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